Customer loyalty is one of the most underrated yet powerful tools a business can wield. Most companies spend their time, money, and resources working to gain new customers or increase their brand awareness most never realize, but it cost five times less to retain a current customer than it does to acquire a new one.
Statistics show the current customers are 50% more likely to like new products you introduce and spend up to 30% more than new customers.
Today, we will take a deep dive into customer loyalty and how we can develop that as small businesses.
What is Customer Loyalty?
Customer loyalty is an ongoing positive relationship between a customer and a business. It’s what drives repeat purchases and prompts existing customers to choose your company over a competitor.
It is critical to the success of any business because it helps your growth and your marketing efforts. Next, we’ll talk about why it’s important and the reasons why it will help your business succeed.
Why is Customer Loyalty Important?
Happy customers or more likely to patronize your business again and again. Whether you’re offering a service or a product, every company should aspire to have customer loyalty. Here are a few specific benefits:
-more word-of-mouth referrals
-higher customer spending
-repeat purchases
-increased trust
How to Increase Customer Loyalty
As the statistics show us, customer loyalty is essential, so it’s equally important to understand what creates it. Customers expect businesses to conduct themselves professionally, be friendly, and be easy to work with. What makes a business stand out more than a competitor, though? If two businesses are offering the same product or service, what will make a client come back to you over your competitor?
Here is a brief list of ways that you can help make your customers fall in love with your business and want to come back again and again
- Be a helpful resource for customers.
- Communicate clearly and effectively.
- Create or improve a customer loyalty program.
- Show how thankful you are for your customers.
- Be generous.
- Continue providing benefits to your customers with every purchase/service.
- Always keep growing your business and getting better.
We won’t talk in great detail about any of these points, but here are a few essential things to consider. First, if customers are willing to spend a lot of money with your business, be willing to show gratitude end reward them for spending with you. A loyalty program can go a long way in creating customer loyalty; whether it’s a free service, money towards a future purchase, free product, or even a discount in the future, customers love this.
Generous customer loyalty programs always stand out. One great example of this is the Chick-fil-A app and how they have allowed customers to earn phenomenal rewards with every purchase. It’s such an easy and streamlined program where all they have to do is scan a QR code at the time of their purchase. Plus, it offers rewards quicker than most other programs and without any hassle.
You can also show thankfulness through handwritten notes for deliveries, special holidays, or hosting a giveaway. The options are endless!
No matter where you are in the process of creating a customer loyalty program or better in your communication with clients, it’s important that you keep their wants and needs first. Help them out and show them that you will be a consistent and reliable resource and create an experience that they can’t help but love.
Types of Customer Loyalty Programs
if you’re considering starting a customer loyalty program, it may feel overwhelming at first. The type of program that you will offer and how you will launch it both matter. Before you go and rush into releasing a new customer loyalty program, make sure you’ve done your research. What works for one company might not work for another, even if that’s something that your competitors are doing.
here are a few types of customer loyalty programs you can research
1. Paid loyalty programs
Think Amazon prime. They charge an annual fee for benefits like free two-day shipping. So yes, the customer has to pay a fee, but they’re often willing to do it because the benefits greatly outweigh the minor cost.
2. Value-based loyalty programs
The Target Circle app offers a tremendous value-based loyalty program. For every purchase customers make that they scan through the Circle app, they earn money that they can donate to the charity of their choice. This helps the community and helps connect with your customer and their unique values.
3. Point-based loyalty programs
Most loyalty programs are point-based. Customers who regularly spend are rewarded with points towards a free product, service, or special offer. For example, purchasing one meal out of business may earn a customer 10 points. When they hit 100 points, their next meal is free. The key to a successful point-based loyalty program is keeping it simple.
4. Game-based loyalty programs
We all know of the iconic McDonald’s monopoly game. This is the perfect example of a game-based loyalty program. It encourages customers to come in to get game pieces as well as make a purchase, and the customer has the benefit of potentially winning money, free food, or other prizes.
5. Coalition loyalty programs
A coalition loyalty program is simply the combination of two companies working together to reward their customers. The important thing is that you find a company that aligns with your values and your target audience.
6. Tiered loyalty program
This type of program allows customers to get more significant rewards based on their spending. For customers who don’t spend much, they can stay at a lower tier, in for customers who regularly patronize your company, they can get into a higher level and be VIPs. Customers who don’t regularly spend money with you can still have access to lower-level rewards without you having to put out high-value rewards to people who are not likely to spend with you. At the same time, you’re most loyal and highest purchasing clients can receive more significant benefits.
Measuring Customer Loyalty
Once you set up your customer loyalty program, it’s essential to ensure that it’s actually working. Like any other marketing campaign, it’s necessary to have measurable goals. It’s also important to keep an eye on your customer loyalty program and get feedback from actual customers.
This can be done by monitoring what people are saying about your business on social media, the amount of traffic you’re getting to your website, your sales numbers, and your customer retention rate. This will look different for every business based on the type of program you launch and your ultimate goals.
We hope that this look into customer loyalty and what it means is beneficial for your business. Customer loyalty programs genuinely offer so much potential and can take your business to the next level! We can’t wait to see what you do with this information!